2018 US Code
Title 26 - Internal Revenue Code
Subtitle A - Income Taxes
Chapter 1 - Normal Taxes and Surtaxes
Subchapter K - Partners and Partnerships
Part II - Contributions, Distributions, and Transfers
Subpart B - Distributions by a Partnership
Sec. 734 - Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction

The basis of partnership property shall not be adjusted as the result of a distribution of property to a partner unless the election, provided in section 754 (relating to optional adjustment to basis of partnership property), is in effect with respect to such partnership or unless there is a substantial basis reduction with respect to such distribution.

In the case of a distribution of property to a partner by a partnership with respect to which the election provided in section 754 is in effect or with respect to which there is a substantial basis reduction, the partnership shall—

Paragraph (1)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in section 754 is not in effect.

The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section 755.

For purposes of this section, a securitization partnership (as defined in section 743(f)) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner.

(Aug. 16, 1954, ch. 736, 68A Stat. 247; Pub. L. 98–369, div. A, title I, §78(a), July 18, 1984, 98 Stat. 597; Pub. L. 108–357, title VIII, §833(c)(1)–(5)(A), Oct. 22, 2004, 118 Stat. 1591, 1592; Pub. L. 109–135, title IV, §403(bb), Dec. 21, 2005, 119 Stat. 2630.)

2005—Subsec. (a). Pub. L. 109–135, §403(bb)(1), inserted "with respect to such distribution" before period at end.

Subsec. (b). Pub. L. 109–135, §403(bb)(2), reenacted heading without change and amended introductory provisions generally. Prior to amendment, introductory provisions read as follows: "In the case of a distribution of property to a partner, a partnership, with respect to which the election provided in section 754 is in effect or unless there is a substantial basis reduction, shall—".

2004—Pub. L. 108–357, §833(c)(5)(A), substituted "Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction" for "Optional adjustment to basis of undistributed partnership property" in section catchline.

Subsec. (a). Pub. L. 108–357, §833(c)(1), inserted "or unless there is a substantial basis reduction" before period at end.

Subsec. (b). Pub. L. 108–357, §833(c)(2), inserted "or unless there is a substantial basis reduction" after "section 754 is in effect" in introductory provisions.

Subsec. (d). Pub. L. 108–357, §833(c)(3), added subsec. (d).

Subsec. (e). Pub. L. 108–357, §833(c)(4), added subsec. (e).

1984—Subsec. (b). Pub. L. 98–369 inserted at end "Paragraph (1)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in section 754 is not in effect."

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Pub. L. 108–357, title VIII, §833(d)(3), Oct. 22, 2004, 118 Stat. 1592, provided that: "The amendments made by subsection (c) [amending this section] shall apply to distributions after the date of the enactment of this Act [Oct. 22, 2004]."

Pub. L. 98–369, div. A, title I, §78(b), July 18, 1984, 98 Stat. 597, provided that: "The amendment made by subsection (a) [amending this section] shall apply to distributions after March 1, 1984, in taxable years ending after such date."